THE DEMAND FOR NITROGEN, PHOSPHORUS AND POTASH FERTILIZER NUTRIENTS IN PAKISTAN

This study has been conducted to find out the factors which have been affecting demand for fertilizer as specified equations for nitrogen, phosphorus and potash, are estimated by using both the static as well as the dynamic models. The results are acceptable from both an economic and statistical point of view. The estimated price elasticity of demand demonstrates variations between the nutrients. The Cobb-Douglas production function has been applied to the analysis and Ordinary Least Square in double log form was used for estimation. The results suggest that the demand for nitrogen and phosphorous are price inelastic both in the short run as well as in the long run while for potash fertilizer, the elasticity of demand is price elastic both in the short run and in the long run. Future shift in fertilizer demand will be dependent on the reduction in the relative price of fertilizer. It indicates either increase in agricultural commodity price or decrease in fertilizer price.